U.S. Economy: Retail Sales, Confidence Beat Forecasts

[steven johnson]

Is this a brief respite or a real trend?

Retail sales and consumer confidence in the U.S. increased more than forecast, indicating that economic growth is picking up as the new year approaches.

Sales climbed 1.3 percent in November, more than double the 0.6 percent median estimate in a Bloomberg survey of economists, a Commerce Department report showed today. The Reuters/University of Michigan preliminary index of consumer sentiment for December rose to 73.4 from 67.4 the month before.

Stocks rallied and Treasuries slid on optimism that American households, whose spending makes up 70 percent of the economy, are weathering the worst employment slump since World War II. The reports, together with gains in Chinese industrial production and imports, reinforce evidence that the global recovery is gaining strength.

“Pent-up demand is beginning to be released,” said John Herrmann, chief economist at Herrmann Forecasting in Summit, New Jersey. “Consumers are tapping into savings and beginning to spend. With the U.S. and global economy turning up, hours and incomes will continue to rise, supporting further gains in consumer spending.”

U.S. Economy: Retail Sales, Confidence Beat Forecasts

[bluestateguy]

1. V

[Pirate Smile]

3. Yes to V & No W or L

[IrateCitizen]

7. Keep on wishin' (nt)

[Mojorabbit]

2. On the six oclock news they said that if you took out

autos and gas it was much lower than that. Hubby and I wondered why gas would be included in this category but???

[fasttense]

4. So, why does Time give a different picture?

"The National Retail Federation (NRF) estimates that 195 million people visited stores and websites over the Black Friday holiday weekend, up from 172 million last year. However, shoppers spent less, with average spending dipping 8%, to $343.31 a person from $372.57 a year earlier. Total spending over the holiday kickoff weekend reached $41.2 billion, up only slightly from $41 billion a year ago.

"Shopper traffic well surpassed our expectations," says Krugman. However, the dip in spending left him cautious, and he continues to project a 1% sales decline for the total holiday season.

Online sales clearly did better, but that's only 4% of total retail sales," says Davidowitz."

I guess it all comes down to spin when you are dealing with such minor changes.

[westerebus]

6. As in..

Honey, put your shoes on and come with us to the mall. ( Thinking to self: it's not you have a job to go to. ) Come on it will be fun....

Hence the increase in traffic.

[upi402]

8. Christmas is a time for nostalgia, afterall...

a job
spendin' money
hope


All hail the UNIPARTY! Hail hail, one and all.

[wuvuj]

5. The real jobs picture?

http://www.frontlinethoughts.com/pdf/mwo121109.pdf


In the '50s through the early '80s, recessions were typified by large layoffs at manufacturing businesses, as they had built up too much inventory. Businesses had increased capacity and often borrowed a little too much. Rising prices in the '70s, along with extremely high interest-rate costs, led to the two severe recessions of the early '80s, which Paul Volcker had to essentially force into existence, in order to begin the process of wringing inflation out of the economy.

But, and this is important, as the economy improved, inventories were eventually worked through and employees were brought back to work. Things returned to normal. The economy would once again grow at a robust rate. Then, in the last two recessions, in the early '90s and early '00s, it took longer for employment to rise. A great part of this was because the manufacturing sector of national employment was becoming an ever smaller part of the economic pie. We were, and still are, turning into an economy driven by services.

I should note that, on an absolute basis, manufacturing in the US has grown (going back to before this recession started.) We just produced more "stuff" with fewer employees. We became more productive. But this means that there are fewer jobs that will be brought "back" to make up for increasing sales than in past recessions. There are estimates out that as many as 2 million of the 8 million jobs lost are permanent job losses.

We know that businesses have made large cuts in numbers of employees in order to address lower sales and to increase their profits. Increasing profits by cutting costs even as the "top-line" sales number is shrinking is not a growth strategy that can be sustained. It also eats into research and development and postpones growth.

How likely are businesses to bring back employees if they have found they can produce more with less? This is a prescription for the mother of all jobless recoveries.